The Foundation of Asset Protection
The True Foundation of Asset Protection (It’s Not What You Think)
When people think about asset protection, they often jump to complex legal documents like trusts and LLCs. While those are powerful tools, the true foundation of any solid asset protection plan is much simpler and more accessible: good liability insurance.
Before you can protect your assets from legal threats, you must first have a strong shield against everyday risks. Skimping on your insurance coverage is one of the most common and dangerous financial mistakes a person can make.
Why Minimum Coverage Isn’t Enough
The most significant risk on the road isn’t just your own potential for an accident; it’s the risk of an accident with an inattentive or reckless driver who has little or no insurance of their own. If you are seriously injured by an uninsured or underinsured motorist, your own policy becomes your primary source of recovery.
Opting for the lowest premium often means you are dangerously exposed. A major accident can easily result in damages that far exceed the minimum liability limits, putting your personal assets—your home, your savings, your investments—at risk of being seized to satisfy a judgment.
A Critical Issue for Seniors: The Medicare Lien
For seniors on Medicare, having robust auto insurance is even more critical due to a concept known as the “Medicare Lien.” Here’s how it works:
If you are injured in an accident caused by someone else, Medicare will be the primary payer for your medical bills. When you later receive a settlement from the at-fault driver’s insurance, Medicare has a legal right to be reimbursed from that settlement money *before you receive a dime*. If the other driver only has minimum coverage, it’s possible for the entire settlement to be consumed by the Medicare lien, leaving you with nothing for your pain and suffering.
The Solution: Medical Payments Coverage
A crucial part of your auto policy is “Medical Payments” or “MedPay” coverage. This is a no-fault benefit that pays for your medical expenses up to your policy limit, regardless of who caused the accident. Crucially, this money is paid directly to you and is not subject to the Medicare lien. For many seniors, this coverage can be the only money they personally receive after an accident.
Build Your Financial House on a Solid Foundation
Good liability insurance is your first line of defense. It protects you from the everyday risks of life so that your long-term asset protection strategies, like a comprehensive estate plan, can protect you from everything else.
If you have questions about how to structure your assets for maximum protection, our experienced attorneys can help. Call our office at (919) 256-7000 to schedule a consultation.